Acquisition boosts scale and market share

BEG has announced another substantial acquisition, of insolvency practice David Rubin & Partners (DRP). It has agreed to pay up to £25m (on a cash/debt free basis with normalised working capital) for DRP, a long-established operation with offices in London and Guernsey.

Following its recent £20.8m purchase of CVR in January, the group has secured a significant scale up of its business recovery & financial advisory arm in 2021 i.e., another c £20m pa of revenues from the two deals is expected to take that operation’s turnover above £70m p.a. Included in the note is access to a video of the Executive Chairman and Group FD discussing the merits of the DRP acquisition and fundraising.

The latest acquisition was funded by a ‘significantly oversubscribed’ £22m shares issue at 105.5p/share, which also provides cash for further growth. We have held our existing forecasts, and will adjust them for the acquisition, cash raised and enlarged equity base post admission on 17 March.

The deal further underpins our 140p fair value/share (16.3x FY22e PER and 2.3% yield) set out in our initiation note published on 2 March 2021.